Weekly DeFi Index

This week's market cap index was negative at -1.40%, while volume and volatility indices were positive at +13.22% and +112.10%, respectively.

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Chart of the Week

Polygon announced it will integrate Celestia with Polygon's chain development kit (CDK) in early 2024, providing an easily-pluggable component for Polygon-based networks to use Celestia for data availability (DA). This will introduce a specialised data availability solution to Layer-2 (L2) projects using the Polygon CDK.

L2s need a data availability layer to securely and reliably retrieve transaction data to verify that a block is valid for all network participants. In Ethereum’s L2s, the Ethereum blockchain is used as a DA layer, which typically results in high fees for data storage. The strength of Celestia is to support L2 rollups as the data availability (DA) layer, thus reducing L2 fees without compromising security. Since its launch, there has been a total of 58MB of data stored in Celestia.

• Cosmos-based projects Umee (a decentralised lending protocol) and Osmosis (a decentralised exchange) plan to merge and create a DeFi Hub for the Cosmos ecosystem. Through a software upgrade, the Umee UX Chain code will be implemented on Osmosis, combining the two projects and enabling advanced features in the exchange.

News Highlights

• Bitcoin Core V26.0 was released on 6 December, with advanced features aimed at streamlining node performance and security. This update also includes a new P2P protocol version that reduces the risks of eclipse attacks and improves network performance. 1% of Bitcoin nodes have been upgraded within the first 24 hours.

• In a post on X, Bitcoin Core developer Luke Dashjr explained that the method used for making Ordinals takes advantage of a vulnerability that was recently patched. According to Dashjr, the vulnerability allowed Ordinals to bypass the code’s limits on extra data in transactions by obfuscating inscription data as program code. However, this bug has been fixed in Bitcoin Knots V25.1 (a Bitcoin Core derivative) and could soon be fixed in future Bitcoin Core versions. This could potentially terminate Bitcoin Ordinals, Dashjr claimed.

• At the latest All Core Developers Execution Call (ACDE), Ethereum developers agreed on a January 2024 activation, if all goes well, for the Dencun upgrade on the Goerli testnet.

• The S&P Global Ratings recently released its stablecoin stability assessment, which assessed various stablecoins on a five-point scale, considering factors such as asset quality, governance, and liquidity. In its findings, USDC was ranked the highest with a rating of 2, while Tether (USDT) was granted a rating of 4, facing scrutiny for its insufficient reserve details and indicating a constrained ability to maintain its fiat peg.

• Major protocols have unveiled plans for a token launch in 2024. StarkNet has announced plans to allocate 1.8 billion STRK tokens (900 million to reward past and future contributions by its users and another 900 million for user rebates), while LayerZero Labs has confirmed that its token is slated to launch sometime in the first half of 2024.

• Decentralised exchange Uniswap V3 has completed the expansion of its operations to the Bitcoin blockchain by integrating with Rootstock. Rootstock serves as a Bitcoin sidechain built by GFX Labs, the team behind trading terminal Oku.

• EigenLayer unveiled 12 initial Actively Validated Services (AVS) for its restaking protocol. After EigenDA, AVSs set to operate on EigenLayer include AltLayer, Backless, Drosera Network, EspressoSys, Ethos, Heimdall Labs, Hyperlane, Language, NEAR, Omni, Silence Laboratories, and Witness Chain.

• Synthetix has approved and implemented SIP-2043, a proposal that puts an end to SNX token inflation. Synthetix stakers no longer need to claim a weekly SNX inflationary reward. Instead, a new SNX buyback and burn strategy will benefit all SNX holders as part of the upcoming Andromeda upgrade.

• The Open Network (TON) blockchain experienced a significant slowdown in transaction processing due to an unexpected surge in activity related to the introduction of a Bitcoin Ordinals-inspired protocol. This led to long delays, with over 2.5 million transactions pending and a processing speed of less than 1 transaction per second.

Recent Research Reports

• Research Roundup Newsletter [November 2023]: We present to you our latest issue of Research Roundup, featuring trending market insights in November, charts of the month, and our exploration of new developments within the Bitcoin ecosystem.

• 2023 Year Review & 2024 Year Ahead: 2023 has been an eventful year for cryptocurrency. In this report, we curate the top cryptocurrency events and trends of 2023, followed by our outlook for 2024.

• Issuing Tokens on the Bitcoin Network: Explore the latest innovations in token issuance on the Bitcoin network. We look at BRC-20, Atomicals, Taproot Assets and Nostr Assets.

Recent University Articles

• What Is Aptos (APT)?: In this article, we discover how Aptos is designed to tackle blockchain’s challenges and make it scalable, safe, and cost-efficient.

• Data Tokenisation: What It Is and Why It Matters for Crypto: Learn all about data tokenisation, how it works on the blockchain, and its application in cryptocurrency and other industries.

• Bitcoin Spot vs Futures ETFs Explained: Learn the difference between BTC Spot vs Futures ETFs — and why Bitcoin Spot ETFs have not yet been approved by the SEC.

Disclaimer

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